The new tax law will create a more favorable tax climate for the business community, which should encourage job and economic growth and keep single-family housing production on a gradual upward trajectory in 2018, according to economists who spoke at the National Association of Home Builders (NAHB) International Builders’ Show.

“We expect that tax reform will boost GDP growth to 2.6 percent in 2018, and this added economic activity will also bode well for housing, although there will be some transition effects in high-tax jurisdictions,” said NAHB Chief Economist Robert Dietz. “Ongoing job creation, expected wage increases and tight existing home inventory will also boost the housing market in the year ahead.”

However, builders will continue to deal with ongoing supply-side headwinds this year that will dampen more robust growth.

Those headwinds include an increasing number of unfilled construction jobs, a shortage of buildable lots and a slow growth in acquisition, development and construction loan activity that is failing to keep pace with rising demand.

In addition, regulatory costs have increased in the past five years, with a significant impact on housing affordability.

The forecast

As the economy continues to strengthen, NAHB expects 30-year fixed-rate mortgages will average 4.31 percent in 2018 and 4.82 percent in 2019.

NAHB projects 1.21 million total housing starts in 2017 and expects overall production to grow an additional 2.7 percent this year to 1.25 million units.

Single-family starts are expected to rise 5 percent in 2018 to 893,000 units and increase an additional 5 percent to 940,000 next year.

Setting the 2000-2003 period as a benchmark for normal single-family housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to gradually rise from 63 percent of what is considered a typical market in the third quarter of 2017 to 73 percent of normal by the fourth quarter of 2019.

Home sales in the Naples area increased for November year over year, according to one of the latest 2017 market reports released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within all of Collier County (except Marco Island). The Bonita Springs-Estero Association of REALTORS® reported an increase of 29.7 percent for new pending sales, an increased number of listings, and an increase in closed sales for several price categories, despite a decrease in the overall number of closed sales for the area.

Overall home sales for the Naples area increased by 3 percent in November year over year, according to the November report. The report also showed increased activity for the single-family home market where sales of properties priced above $300,000 increased by double digits. Local brokers reviewing the activity of the market for the month expressed that they were satisfied with the closed sales activity for the high-end market, which showed a 21 percent increase in single-family home sales and a 22 percent increase for condominium home sales in the $2 million and above price category.

For the single-family home sector, the Bonita Springs-Estero market showed a 16.7 percent increase for home sales in the $150,000 – $199,999 price range, a 100 percent increase for home sales in the $200,000 – $249,999 price range, a 9.1 percent increase for home sales in the $250,000 – $299,999 price range, and a 5.3 percent increase for home sales in the $300,000 – $399,999 price range. The townhome and condominium home market in the Bonita Springs-Estero market showed an increase of 7.1 percent year over year for closed sales.

The Naples housing reports show that November was a good month for both buyers and sellers, as sellers are pricing homes to sell and buyers are responding positively and quickly, especially due to continued tightness with inventory.

The November Market Report for the Naples are showed the overall median closed price increased by 9 percent to $330,000 for November 2017 in comparison to $303,000 in November of 2016, and overall pending sales in November increased to 728 compared to 713 last year. An even more dramatic improvement – pending sales for homes valued at the $1 to $2 million price range increased by 30 percent in November to 61 from 47 in November of 2016. There were 116 cash transactions for properties listed in the under $300,000 price range, which was higher than what was anticipated and may be an indicator that a higher number of investors are returning to the market.

The Naples Beach area saw a 28 percent increase in its median closed price, from $762,000 in November 2016 to $975,000 in November 2017. The luxury market is seeing a lot of positive movement – November showed a dramatic 63 percent increase in pending sales for single-family homes priced over $1 million. This is a clear sign that high-end buyers continue to find the Southwest Florida area an appealing location for investment.

The median closed price for the Bonita Springs-Estero area decreased by 5.3 percent to $355,000 for November 2017 in comparison to $375,000 in November 2016. The average sale price for homes in the area decreased by 10.3 percent to $436,084 from $486,014 in November 2016. The number of cash sales for single-family homes in November 2017 increased by 25.8 percent year over year and the number of cash sales for townhomes/condominium homes increased by 10.8 percent for November 2017 in comparison to November 2016.

The total number of existing-home sales across the U.S. increased in October, totaling at their highest level since the beginning of the summer this year. The total of existing-home sales – including single-family homes, townhomes, condominium homes and co-ops – increased by 2 percent to a seasonally adjusted annual rate of 5.48 million in October from 5.37 million in September of this year. After the October increase, sales are at their strongest level since June when they were at 5.51 million.

National Association of REALTORS® (NAR) Chief Economist Lawrence Yun said sales activity in October picked up for the second straight month, with increases in all four primary regions. “Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which in turn is giving households added assurance that now is a good time to buy a home,” Yun said. “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida. However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.” As seen by October reports from Naples Area Board of Realtors®, areas of Southwest Florida have already recovered nicely, reporting an increased number of closed sales for October.

The median existing-home price for all types of housing in October was $247,000, representing an increase of 5.5 percent from October 2016 when the median existing-home price was $234,100.

“Listings – especially those in the affordable price range – continue to go under contract typically a week faster than a year ago, and even quicker in many areas where healthy job markets are driving sustained demand for buying,” said Yun. “With the seasonal decline in inventory beginning to occur in most markets, prospective buyers will likely continue to see competitive conditions through the winter.”

First-time homebuyers represented 32 percent of sales in October, which shows an increase of 29 percent from September.

Single-family home sales increased by 2.1 percent to a seasonally adjusted annual rate of 4.87 million for October from 4.77 million in September of this year, but still 1 percent less than the 4.92 million total from one year ago. The median existing single-family home price was $248,300 in October, an increase of 5.4 percent when compared to October 2016. Existing condominium home and co-op sales showed an increase of 1.7 percent to a seasonally adjusted annual rate of 610,000 units in October, which remained unchanged from one year ago. The median existing condominium price was $236,800 in October, which is 6.9 percent more than one year ago.

Existing-home sales in the South region of the United States increased 1.9 percent to an annual rate of 2.16 million in October and though this is still 1.8 percent lower than one year ago, this level is considered extremely positive considering the affects of the hurricane that have been dealt with. The median price in the South was $214,900, representing an increase of 4.6 percent from one year ago.

The level of home builder confidence in the single-family home sector of the housing industry has shown an increase of four points, reaching a level of 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This was the highest reading since May.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” says NAHB Chairman Granger MacDonald. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

“It’s encouraging to see home builder confidence return to the high 60s levels we saw in the spring and summer,” adds NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market to continue to strengthen at a modest rate in the months ahead.”

Resulting from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index measures home builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each part are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted increases for October. The component measuring current sales conditions increased by five points to 75 and the index gauging sales expectations in the next six months increased five points to 78. The section measuring buyer traffic ticked up a single point to 48.

The steps and decisions involved in purchasing a home for the very first time can be very long and arduous with regard to finances particularly. If you also lump on a substantial mortgage to the amount of paperwork and negotiations back and forth, there is a lot to take into account. Accepting such a significant financial responsibility and deciding how much a buyer can really afford is a big part of the entire process. The question that always comes up with first-time home buyers is with regard to how much one should stretch their budget and whether to start with a more modestly priced and sized starter home or invest in something larger, newer and more expensive from the start. This is not something to be taken lightly.

“The most important factor in your success as a first-time home buyers is to live within a budget,” says Michele Lerner, author of “Homebuying: Tough time, First Time, Any Time.” “It’s crucial to look realistically at your assets and your current and future income to evaluate what you can comfortably afford.”

There are in fact certain circumstances in which extending one’s budget to invest in something larger and newer from the start could be considered a good option. An example of such an instance would be if the first-time home buyers are about to finish college and know that they will have a substantial increase to their income in the next few years. Another thing to consider when investing in a larger and newer home from the start, beyond the mortgage payment, is that costs (maintenance, home repairs, utilities) for a larger home will be higher overall.

“It is tempting to spend down to your last dollar to get the home you want, but that’s a risky proposition,” says Lerner. “Owning a home can bring some unexpected surprises that renting doesn’t, such as a plumbing bill or a leaky roof.”

If a potential buyer determines that their needs will not be met in a starter home, the best option may be to wait it out a bit longer, until their income increases or they have saved a larger amount for the down payment. Industry experts say, typically, it is best to stay in a home for five to seven years in order to recuperate one’s investment and have some time to build equity. This may mean looking ahead to see if the house that is being considered at this moment in time will be suitable for five to seven years, potentially.

In popular markets, however, it may make sense to purchase a home that is less than perfect when meeting one’s needs. Some will buy a house just to get into the housing market and potentially reap rewards from an appreciation in value, even without remodeling the home.

There are various down payment assistance programs for first-time home buyers. If one is considering the purchase of a smaller and/older home, to potentially remodel it, housing industry experts suggest having a conversation with a potential lender regarding the financing of the purchase and the renovations project within a single loan.

An estimated 10,000 baby boomers are retiring each day, which is inevitably having an impact on the real estate market. Builder focus in the single-family 55+ retirement housing market has increased for the second quarter of 2017 with a reading of 66, an 11-point increase over the first quarter of 2017, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI).

It’s not only a significant quarter-to-quarter increase, but also the 13th consecutive quarter with a reading above 50, which means that more builders view conditions as good rather than poor. “Demand for 55+ housing continues to grow, and this quarter’s index is a reflection of that,” says Dennis Cunningham, chairman of NAHB’s 55+ Housing Industry Council. “Consumers in this market want a home that addresses their specific needs.”

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominium homes. For each of the segments, the HMI measures builder sentiment in a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).

All three components of the 55+ single-family HMI posted increases in comparison to the prior quarter: Expected sales for the next six months rose 12 points to 80 (an index high), while present sales increased eight points to 70 and traffic of prospective buyers jumped 19 points to 53, also an index high.

The 55+ multifamily condo HMI rose seven points to 53, with all three components also posting gains in the second quarter: Present sales increased six points to 56 (an index high), while expected sales for the next six months and traffic of prospective buyers both increased eight points to 55 and 45, respectively.

All four indices tracking production and demand of 55+ multifamily rentals posted gains in the second quarter: Present production increased by three points to 53, expected future production increased by eight points to 52, current demand for existing units increased two points to 66 and expected future demand increased by five points to 67.

“We are seeing strong demand in the 55+ housing sector due to favorable market conditions, such as record highs in the stock market and rising home prices,” says NAHB Chief Economist Robert Dietz. “This quarter’s reading is in line with our forecast, as we expect to see continued gradual gains in 2017.”

According to Curbed.com, Hispanics increasingly make up what is considered the typical American homebuyer. Hispanics are expected to represent 52 percent of new homebuyers between 2010 and 2030, primarily driven by the country’s 14.6 Hispanic millennials.

From the year 2000 to present, the number of Hispanic households has increased by 6.7 million, which makes up 42.5 percent of the country’s overall household growth. Hispanics’ strong desire to own a home has driven home buying by Latinos across the United States, according to housing market experts.

“The fact is the majority of Latinos want to be homeowners and will make up half of all new home buyers in the next 20 years,” Scott Astrada, Director of Federal Advocacy at the Center for Responsible Lending, told NBC. “They have a central place in the housing market and finance system,” Astrada added.

Harvard University Joint Center for Housing Studies’ “State of the Nation’s Housing” study forecasts that minorities overall will drive three-quarters of the gains in U.S. households. Latinos will likely account for one-third of those increases alone.

Hispanics currently make up 17 percent of the U.S. population. Hispanics are expected to make up the largest segment of the Texas population by 2020 and comprise a prime source of population growth in California too.

“With credit remaining tight and limited housing inventory in several markets, these numbers are extremely encouraging and a testament to the economic resilience of the Hispanic community,” says Joseph Nery, 2016 president of the National Association of Hispanic Real Estate Professionals.

Real estate analysts say they view this market demographic as one of the major growth engines for the American housing and real estate industries.

But there are plenty of challenges that could jeopardize Hispanics making a larger imprint on the real estate industry. The Great Recession had a large impact on their savings, wiping out an estimated two-thirds of Latino wealth. NAHREP urges that this population would benefit from expanding access to affordable lending products with low downpayment requirements.

NAHREP cites stats that show Hispanics were denied loans at a rate of 17.3 percent, which is 9 percentage points higher than the denial rate for non-Hispanic whites. Also, NAHREP warns that deportations and immigration policies could have an impact on the Hispanic housing market. A 2016 study linked deportations to increased foreclosure rates among Hispanic households.

With all factors in mind, the overall current situation remains: Hispanic homeownership is helping to fuel the United States residential real estate market and this effect is expected to continue.

Sales of new United States homes decreased by 9.4 percent in July, representing the strongest one-month decreased in close to a year. But the decrease followed strong sales in previous months, and sales so far this year are outperforming last year’s.

The Commerce Department said Wednesday that new-home sales fell to a seasonally adjusted annual rate of 571,000 in July, down from 630,000 in June. Last month’s figure was the weakest since December.

Even so, sales in the first seven months of the year are 9.2 percent higher than in the same period last year. More buyers are turning to newly built houses as the supply of existing homes for sale has fallen consistently.

The housing market overall is healthy for the most part, but sales have stumbled this summer as a supply crunch has elevated average home prices nationwide. The increasing price levels have made homes too expensive for a number of potential buyers, even as healthy hiring has lowered the unemployment rate to a 16-year low of 4.3 percent.

Builders are ramping up the supply of new homes, providing some much needed relief. The number of newly built homes available is still below historical levels but the supply of new homes for sale increased by 1.5 percent in July from June to 276,000. That’s 16.5 percent higher than a year earlier.

That level is considered enough to last 5.8 months at the current sales pace – near the 6 months that is typical in a healthy residential housing market.

By contrast, the number of existing homes for sale decreased by 7.1 percent in June in comparison to the numbers from a year earlier. The larger supply of new homes has kept prices from rising as much as in the market for existing houses. A typical new home sold for $313,700 in July – below the $316,200 average price for all of last year.

Prices for existing homes increased by 5.6 percent in May when compared to the previous year, according to the latest data available via the S&P Case-Shiller home price index.

The rate of homeownership has progressively fallen since the Great Recession from 70 percent to an estimated 64 percent today. Housing industry experts say that new data indicates an approaching increase in the homeownership rate for the current year.

Real estate-focused website Trulia has evaluated the Census report and uncovered that owner households formed at two times the rate of renter households during the first quarter of this year. Per Trulia, this is an indicator that the largely anticipated millennial homeownership boom may be helping to push the homeownership rate up after 10 years of decline.

“Strong renter formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis, so any sign this trend is reversing is something to take note of,” said Ralph McLaughline, Chief Economist for Trulia.

Industry professionals as well as potential homebuyers have credited the inability of young renters to come up with the money for a down payment as a primary obstacle in entering the housing market. Seventy percent of the renters who recently participated in a survey conducted by Zillow said that saving up enough money for a down payment is a bigger obstacle than any concerns over debt from student loans or other debts.

Homeownership rates in the first quarter of this year were highest among homeowners aged 65 and older (78.6 percent), while the homeownership rates were the lowest for homeowners aged 35 and younger (34.3 percent).

Other Census report data relevant to this topic includes:

Homeowner vacancy rate was 1.7 percent for the first quarter of 2017, while the renter vacancy rate was 7 percent.

3 percent of the United States’ housing was occupied in the first quarter of 2017, with 55.5 percent owner-occupied and 31.8 percent renter-occupied.

A recent survey by National Association of REALTORS® (NAR) shows that approximately eight out of ten Americans still believe strongly that buying a home is a good financial choice.

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